How To Increase your Real Estate Portfolio ROI
When people hear the term property manager, they may visualize maintenance work, paperwork, and tenant complaints. However, a property manager really isn’t a landlord.
The reality is that a property manager is responsible for making a rental property investment work. His or her duties are more to plan and execute good decisions regarding tenants and the profit and expenses of your rental properties. Those could involve people, purchasing, using software and more.
Your property portfolio should be a source of joy, optimism and rewarding relationships. It’s the core of your business and the source of income from now to perhaps past retirement.
Despite the blog header graphic, real property portfolio optimization isn’t about slick tricks to squeeze out profits from stressed out tenants or cut corners on expenses. It’s about a strategy to build value with tenants and then capture that value.
How to Manage Your Portfolio Better
Property management is demanding, yet with the right info and software tools, you probably can manage your entire portfolio well on your own. With more time at your disposal, you can learn what you need and get help where you need it.
Optimizing your portfolio means using a top down strategy that rids you of micromanagement and stress.
If you optimize your entire approach to portfolio management, it stands to reason you’ll grow your revenue, lower your costs, and create freedom for yourself and your family. Big rewards that really are all in your hands. You get to choose your outcomes through your planning, preparation and ongoing professionalism.
Property management gurus and efficiency experts advise that optimizing administration tasks as the way to better profits. In truth, it’s higher level execution that will help you avoid poor performance and having to rely on a property management company. And as far as task management is concerned, your software will help you.
Grow your Portfolio
To get better motivated, look at your portfolio as a legitimate way to capture the life you want, to perhaps travel, enjoy free time, and maximize its revenue performance. You can add new properties once you get the whole optimized property management process down pat.
A New Way of Looking at Property Management
Looking at your portfolio differently means you won’t be falling into the usual traps that limited others before you. Those are investors without a plan. They gave up or had to hire property managers and thus raised their risks and costs significantly.
10 Superb Tips for Your Overall Property Management Strategy
1. Choose the Right Properties
When you buy low rent properties in low grade buildings in high risk neighborhoods, the odds are against high returns. With high maintenance properties, and money pits, the stress and demands are endless. It’s in the nature of these types of properties that they can’t be serviced cost effectively and their resale value is more of a gamble than a sure thing. The right properties need careful review and selection.
2. Keep your Portfolio at the Optimal Number
More isn’t always better. Taking on low priced properties that you speculate will grow in resale price could backfire. These could end up costing you big time in fees, emergencies, and tenant trouble, and if you have many of them, the overwork and cost could ruin you. It’s better to have fewer higher priced rentals where you can add value and ask for higher rents. Be strategic, patient and wise.
3. Assess the Market Forecast and Ideal Neighborhoods Carefully
Indeed, properties in Austin, Denver, or Riverside might be on the upswing, but there’s a lot to know. Besides the Cap rates, where are the major intersections, transit routes, walkable neighborhoods, parks, and what zoning bylaws could give you trouble? An experienced real estate agent will help as will an association of property investors or a real estate investment group such as www.nationalreia.org.
4. Sell or Divest of your Lowest Quality Properties
Getting rid of your losing properties is just as important overall as finding your next gem. In terms of poor returns and added stress, divesting is a wise move that lets you focus only on high performance properties.
5. Use a Simple Property Management Software Solution and Automate
Just the process of automating, moving online, and depersonalizing tasks such as payments will encourage tenants to be responsible, on-time, and pester you less for maintenance issues.
Unless you like driving to the property to change a light bulb, or flicking the breaker back on, create a system that that lets tenants take some responsibility. Your time is gold and simple rental property software will let you avoid the time waste.
6. Advertise for Tenants Carefully
Don’t advertise on free forums and sites such as craigslist. It’s not focused and you’re likely to get the type of applicants you don’t want. When you think about it, your business is your tenants. You get to choose your tenant and source of income by how and where you advertise.
Create a strong social media following of high quality prospects. Facebook allows 5000 connections and linkedin 20,000. These are two channels you can regulate and constantly filter to maintain contact with the best tenant prospects.
7. Screen Tenants Carefully
This vital task needs your full attention. A credit check isn’t a guarantee of future cash flow. The tenant’s work history, references, and social profiles will help you gauge their level of integrity and resourcefulness (while adhering to legal guidelines in your state and country).
You can hire a personality assessment professional, or be taught how to evaluate people. Some might consider this controversial, however rental property investors who have been plagued with non-paying troublesome tenants who can’t be evicted, know caution and screening are crucial to their success.
8. Pursue your Dream of Full time Property Investment, Travel, and Personal Growth
The minute you become tied to a desk micromanaging property maintenance and hand holding tenants, is the time your business heads downhill. If you’re in it for additional lifestyle benefits, don’t create a worklife that makes your goal of freedom and experience unattainable.
9. Set the Right Rental Price
You’re best to choose a good property and make it an irresistable place to live, and you’ll receive the maximum rent. When you advertise/prospect for tenants professionally, you’ll get the tenants who can pay that rent. Ensure you have the right rental experience to keep them happy.
10. Always Treat your Tenants with the Utmost Respect
Your attitude is a key factor in whether they renew, or agree to a rent increase, because if they don’t like you, they’ll leave when the lease is up. Before you call them and meet with them, review their file and then you’ve be able to make small talk about the fun and meaningful things they do. It’s all about them.
Have goals for your contact, respect their time, keep them informed ahead of time so they understand their responsibility and they’ll always be ready to say yes to you. This is a good way to maintain optimal relationships with anyone.
Property management isn’t just paperwork nor is it tasks. It really comes down to visualizing an approach to finding the best properties and customers, managing tenants and creating a positive framework for an effortless ongoing business relationship. It’s about maximizing revenue and after tax income.
Automation Can be a Good Thing
Think big picture, automate with online property management software, and be smart and positive about your business. Your portfolio of high quality rental properties will grow and you’ll enjoy the income and freedom you desire.
A career in property investment is a hot one, but many entering the field will not be prepared and could lose a fortune in it. Those fail to plan, plan to fail.
We hope these strategic tips help you optimize your return on investment and keep this business interesting and rewarding for you. Let us know how you’re doing.
See also: Cloud Based Property Management Software | Renter Demographics | Tax Tips for Property Managers | Real Estate Portfolio Tips | Starting a Property Management Business | Increase Investment Property ROI | Improve Property Cash Flow | Property Management Contractor Scams | ManageCasa Property Management Solution | Tenant Screening App for Landlords